“While early access has some merits, there is insufficient evidence to suggest it would act as an incentive to save more into pensions. We will work with industry to develop workplace saving to to supplement pension savings.

“In addition, we will explore other ways of making pension tax rules simpler and more flexible, for example by making it easier to deal with small pension pots.”

The Treasury says it will continue to explore introducing a link between pensions and Isas through a feeder fund model. This could include implementing a threshold above which liquid savings are automatically rolled over into the pension part of a product.

It also suggests further reforms to pensions should be placed on hold until automatic enrolment is rolled out in October 2012.

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Comments

There are 10 comments at the moment, we would love to hear your opinion too.

Early access to pensions on a loan basis would free us a massive amount of potential credit in the economy. Why would it be a problem for someone to borrow from their own pension fund and pay 7% to themselves rather than borrow from a bank. The stability of return would be far greater than that offered from the stock market.

It is the policy holders money and often one of the largest assets a person holds. Why force somebody to borrow from somebody else i.e. a bank to fund purchases through out their lives and then force them to lend at the same time to somebody else i.e. the stock market to create a return for their savings.

Early access would increase savings into pensions because the money would have real value to the holder instead of being out of touch for 30 – 40 years.

Very disappointing and very last century. I wonder whether the treasury really wants any more pension saving. Perhaps they are like the majority of employers – they say they would like staff to join the pension scheme but really they would rather they didn’t because it costs them money.

Be careful if this means a restriction as to what clients can dowith their ISA monies, this may reduce the use clients make of ISA’s. It may be good for clients to have the option to set up a feeder account, but Automatically doing it over a certain level of ISA savings may damage ISA savings, as people often use ISA savings for cash they want full, not restricted access to.

Dumbo! Duh!!
“there is insufficient evidence to suggest it would act as an incentive to save more into pensions”. People are NOT saving for pension as it is difficult – if not impossible – to access monies ‘early’, perhaps when they are most needed, so (even if funds are avialable, of course), people are using ISAs and keeping any spare change under the proverbial bed.
Perhaps a little bit of clear sky / out of the box thinking by the Govt would help them realise the current obstacles to pension saving.
G.., give me strength!

Great idea in theory but there are always practical implications. Many insurance companies are not set up to give out and administer loans/ loan repayments. Also what would happen if the individual concerned defaults on the loan? Do they come back and claim income support from the government?

Insurance companies collect direct debits, insurance companies make payments from pension funds and insurance companies can calculate a rate of interest. How hard can it be to administer, and if too hard I am sure there are other companies that could.

Defaulting on your own pension fund is a potential outcome although a bit self defeating. I can see that it would be a way to pull money out of a fund and pull a runner – but just set the rules to include a clawback of tax relief if default occurs and where is the problem. Could be a maximum lending limit etc.

Seems that the few feckless people could be used as an argument to prevent sensible people from accessing a very useful facility!!

Michael Both

Q. Which group could run pensions with a loan facility effectively?
A: Banks.

Q. Which group could do with a bit of extra capital at the moment on which to make a margin.
A: Banks.

Insurance companies collect direct debits, insurance companies make payments from pension funds and insurance companies can calculate a rate of interest. How hard can it be to administer, and if too hard I am sure there are other companies that could.

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Sounds simple but all of a sudden a firm wil have to vary its contracts, get FSA permissions, have to apply more FSA regs to its plans, administer said plans, get legal advice etc

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Defaulting on your own pension fund is a potential outcome although a bit self defeating. I can see that it would be a way to pull money out of a fund and pull a runner – but just set the rules to include a clawback of tax relief if default occurs and where is the problem. Could be a maximum lending limit etc.

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WHO would be responsible for the clawbacks – the insurance company or HMRC? If it is the insurance company how much is it going to cost chasing poeple for monies (and how difficult will it be for them to actually do)? Where is the profit for insurance companies to chase monies on behalf of HMRC? Now all of a sudden we have insurance companies moving into debt colelcting on behalf of HMRC! As i said it might seem simple but the practical problems are immense.